Speak Softly... and Carry a Big, Fat Pipe

We hear a lot about the need for speed. Is a high-speed connection really that important to the bulk of the audiences we target with online advertising?

They surf significantly faster. Broadband users also spend more time online. Can you blame ’em? Today, this group is a mere 20 to 30 percent of the total U.S. online population. @plan reports 30.9 percent of the online population, representing 41,479,073 users, have broadband connections. MediaMetrix (now part of comScore), estimates the 24 million people with at-work broadband connections will more than double to 55 million by 2005.

Jupiter puts the broadband audience at 37.9 million, or 32 percent of the online population (at work and at home).

It’s been said that within a year or so, those 20 to 30 percent will account for the majority of time spent online. Jupiter thinks broadband portals have too little reach to matter to online advertisers. I strongly disagree. As media types and marketers, we need to keep an eye on this group.

Many questions come to mind:

As broadband penetration increases, will publishers be able to keep up with fresh content?

Will rich media begin to dominate ad units rotating within sites?

Broadband users spend more time online but less time on the Web. How can we be smarter with our messaging to effectively attract them?

Will this group be responsive to online advertising?

According to McKinsey, although Web use may decline as a percentage of total online time after widespread conversion to broadband, it will increase on an absolute basis. Entertainment sites benefit from the biggest proportional increase in time spent: from 17 to 25 percent. Usage of gaming sites in particular shot up. Sites featuring bingo and other games of chance were far more popular, on average, than skill-oriented action games.

McKinsey, Jupiter, and Vividence profiled users and found today’s broadband consumers can be usefully divided into six segments. The most interesting are entertainment junkies and hobbyists. Consumers in these segments don’t spend the greatest amount of time online, but they regularly use their broadband connections to find information related to their offline lives, such as movie times and concert dates — information consumers in other segments still reflexively search for offline. Entertainment junkies and hobbyists offer great opportunities to companies that can integrate online offerings with their offline activities. Hobbyists are older, on average, than entertainment junkies. They may prove to be the most promising consumers of all for online businesses, given their high level of engagement, their willingness to spend money, and the narrow target they offer to advertisers.

Can broadband penetration revive the economics of online ad sales?

Online entertainment certainly lends itself to broadband. Will this lead to new business models? In recent McKinsey and Jupiter findings, signs point to yes. These new business models don’t depend on advertising related to the entertainment sector. Three models were found to be potentially viable in the near term:

Selling and delivering non-interactive digital entertainment

Expanding the market for fee-based, online gaming

Marketing offline entertainment

False hope? Are we betting on broadband to take us to the next level of effective online advertising?

Consider how effective keyword and paid-placement searching are today. However narrow or broad your bandwidth, it cannot be denied: Internet users are destination-driven. No matter how the issues play out, we mustn’t forget the lowest common denominator.